We are paid too much, say senior executives

The pay of Britain's top company bosses is rising at more than five times the rate of the average employee. Photo / Thinkstock

UK business leaders believe they are overpaid and shareholders should have a greater say in setting executive pay levels, a new report has found.

Two-thirds of bosses surveyed by the accounting firm Grant Thornton said senior executives were paid too much, with the proportion in agreement rising to 77 per cent in Britain.

The report follows more evidence that boardroom salaries are spiralling further away from those of ordinary workers.

The pay of Britain's top company bosses is rising at more than five times the rate of the average employee, who has seen a decline in wages in real terms, according to research out last week from Income Data Services (IDS).

Grant Thornton found that 67 per cent of business leaders think investors should have greater say in establishing remuneration policy.

The research comes after Vince Cable, the Business Secretary, unveiled a package of measures to crack down on excessive boardroom pay before Parliament's summer recess.

Cable intends to cap generous pay deals, prevent rewards for failure and simplify the dizzying metrics behind remuneration schemes. He will also hand shareholders a vote every three years from 2014 on a company's pay plan.

But the new accord has yet to cap rocketing executive pay. The total pay package for the typical chief executive of an FTSE 100 company hit £3 million ($5.8 million) for the first time last year, an increase of 8.5 per cent, IDS said.

The rate of growth has slowed markedly from the 49 per cent rise reported 12 months ago, but it still compares favourably with the 1.6 per cent average hike for workers nationally - which is less than half the rate of inflation.

"Dialogue between boards and investors is essential to good governance," said Simon Lowe, Grant Thornton Governance Institute chairman.

"Historically within the UK we have seen reticence among investors to actively engage in this process. However, this appears to be changing, according to the latest Investment Management Association survey, which has reported a rise in investor interest in greater engagement."